The other day I happened to run across a company called Aon Rent Protect who claims to offer insurance that will pay the landlord when their tenant stops paying. I thought it was a very interesting concept and I have to say, up front, that I have not used this service before nor do I have any experience with this company personally.

From the outset, the company’s sales pitch sounds really great and the costs don’t seem too onerous but the devil is usually in the details.

Upon further inspection of the coverage details, it seems that there are the normal dollar amount limits to what they will pay and then there are the expected eligibility requirements. It seems that the company only will accept what sounds to me like perfect tenants.

The tenant must have been occupying the property for at least 12 months with no delinquency in paying their rent. In my experience, I’ve found this situation to be EXTREMELY rare. If the tenant has lived in the property less than 12 months or has paid their rent late within that time, Aon Rent Protect requires a credit check, eviction search and a criminal records check. All of which should have been run by the landlord before renting anyway.

For as long as I’ve been in this game, it’s rare to come across innovative products or services and can actually help a landlord in a time of need. If this service works as advertised, it can be added peace of mind for a landlord when a tenant’s situation goes “sideways.”

Insurance for deadbeats – and I thought I’d heard it all! In my experience, the best “insurance” against those tenants is not having them. Obviously, we can’t detect every one (some are a little too sneaky) but with proper screening and unwavering standards, we can definitely hedge our bets against them!

Cool concept, but I think you are right. Aon only takes on perfect tenants for which you don’t need insurance for. I feel like they are either really banking on being good salesman or need to rethink their idea.

Sounds great but honestly if you have that perfect tenant in your property it’s not likely that they will be the ones not to pay rent. It’s more likely to be the people who just moved in 6 months ago that pay late more often than on time, in which case the insurance won’t help you anyway.

Another good way to limit your liability is to screen your tenants. I always pull a credit report and national criminal check. A few tenants have balked at the idea but most are okay with it. I think if you have nothing to hide you shouldn’t be concerned. It’s usually the ones that are concerned that have an issue with it. For 30 bucks, the peace of mind is worth it. I feel like I’ve dodged a few bullets on some of these applicants when the reports come back. There’s a few out there that do a complete credit report that’s instant.